UK trade surplus for financial services hits record high of £63bn

The UK's trade surplus in financial services has hit a record high of £63.4bn, new research shows.

TheCityUK cited data showing the amount Britain makes from its financial institutions has dwarfed the amount it pays to other countries for their services - which could exacerbate concerns about the impact Brexit could have on the sector and therefore the economy as a whole.

Britain's financial trade surplus is more than that of the next four leading countries - the US, Switzerland, Luxembourg and Singapore - combined, and has risen by £185m year-on-year, according to the industry body.

The income is considered vital to alleviating the UK's overall trade deficit, which stood at £-38.7bn last year as the country struggles to export as much as it is importing in most sectors.

London is considered a world financial leader with more international banks trading in the city than any other place in the world.

The capital also accounts for the largest share of international bank lending globally, and 37% of worldwide foreign exchange transactions take place in the UK - double the amount of US dollars and euros are traded in Britain than in either of their home markets.

The new figures come as the sector waits with bated breath to find out whether the Government will opt for a 'hard' Brexit, which would see Britain leaving the European single market.

A previous report by TheCityUK suggested a 'hard' Brexit could cost the City of London (LSE: CIN.L - news) 75,000 jobs.

Miles Celic, TheCityUK chief executive, said: "The continued growth of the industry's trade surplus is a direct reflection of the strength of the UK as the leading exporter of financial and related professional services globally.

"It is absolutely essential that the Government remains focused on implementing bold policies that protect the attractiveness and competitiveness of the UK as a place to do business through Brexit and beyond."

There are particular concerns in the industry around the future of the UK's passporting rights, which allow banks and financial institutions in Britain to trade seamlessly across the single market without the need for licences in individual countries.

The UK could stand to lose those rights once Britain officially pulls out of the EU, making the UK a less attractive place for banks and financial services to set up shop and raising fears that many could move their operations to Dublin, Ireland (Other OTC: IRLD - news) in order to maintain their links to the EU.

Labour MP Stephen Kinnock, of the Open Britain campaign, said the new data "reinforces the fact that the Government must aim for the very best deal for the City in its negotiations with the EU, which means unfettered access to the single market".

He added: "To protect jobs, public services and economy stability, we need a Brexit deal that keeps the single financial passport, and retains unfettered access to the EU single market."

Commenting on the figures, Liam Fox, International Trade Secretary, said: "As we champion free trade and build new global relationships, we are supporting businesses to seize this unique opportunity to attract investment and expand into new markets.

"Financial services are already leading the way for other sectors to follow."